Sentencing is set for May 20 for three people convicted last week on federal charges in the scandal over misuse of $4.7 million in Lee County funds intended to salve the region's recession-scarred economy.

Robert and Kay Gow, the Lee County couple who created VR Laboratories LLC and pursued a $5 million county economic incentive grant to fund it, face decades in federal prison.

Co-defendant John G. Williams Jr. was facing up to 25 years at the time of his indictment, but that maximum may be reduced due to his acquittal on two of the five charges against him.

Williams is 67, Kay Gow is 68 and Robert Gow is 77.

Kay and Robert Gow leave U.S. District Court in Fort Myers Friday after being convicted on 10 counts connected to the squandering of $4.7 million in Lee County funds from an economic development grant.(Photo: Bill Smith/The News-Press)

Gows interest in Arizona operation

Even as they prepare to be sentenced, the legal problems faced by the Gows mount.

Assistant U.S. Attorney Michael Leeman announced in court after the verdict was returned that the Gows are under investigation in Arizona in what he called "V.R. Labs Part II" for its similarity to the case tried in Fort Myers.

He said the investigation is centered on the Gows' operation of a company known as HSRx Group.

Robert Gow is executive chairman of HSRx, according to archives of an HSRx website last modified in December. The company's internet domain registrar, Go Daddy, has removed the website from public view and put the name up for sale.

Robert Lucas, a Tucson attorney who represents HSRx Group, said in a telephone interview Wednesday that the company has asked Robert Gow to resign.

"We expect that he will be resigning," Lucas said. "We have requested his resignation."

Records filed with the Arizona Corporation Commission show that four companies had an interest in HSRx Group when it was created.

Two are controlled by Gow interests. One is HerbalScience Group LLC of Bonita Springs, a Gow-owned entity that figured prominently in the Southwest Florida criminal trial.

Another Bonita company controlled by the Gows, Advanced Analytical Technologies, was also a member of the HSRx Group limited liability company.

Two Arizona entities were also among the company founders.

One is Sullivan Laboratories of Tucson, headed by Thomas Sullivan Jr., another of the HSRx Group's three-member board, according to Lucas. The second Arizona entity is the Frank and Susan Parise Family Trust.

Frank Parise Jr., a certified public accountant, is the third board member and is the HSRx chief financial officer.

Lucas claimed in an interview that there is no pending federal investigation of the Tucson company, despite the prosecutor's public statements in federal court in Fort Myers.

"I have never spoken to the United States Attorney and if they have an investigation going, I don't know anything about it," he said Wednesday.

A few hours later, Lucas spoke with the Arizona Republic and expanded on his claim. The publication and The News-Press are owned by Gannett Co. Inc.

“There is not an investigation of HSRx going on in Arizona. HSRx never was the target of an investigation, and is not now," Lucas told the Phoenix-based newspaper. "We believe that was a misstatement in the paper, and we believe the government thinks it was a misstatement.”

The U.S. Attorney's Office in Tampa did not immediately respond to a request to respond to the Lucas claim.

Lucas, the Tucson attorney, also said no target letter had been received by HSRx and while he was aware that company employees had been interviewed, was "told by the FBI that they are not targets,"

Both VR Labs and HSRx Group LLC share common practices in operations. Both were involved in acquiring rights to products developed with the help of HerbalScience, the Gow-owned company, to use natural ingredients to cure common ailments. Both sought investors or partners to bring products into the stream of commerce.

Pre-sentence report pending

Meanwhile, U.S. District Judge John Steele has ordered the federal probation department to prepare a pre-sentencing report on the three convicted felons.

The report must contain a range of prison sentences calculated according to federal sentencing guidelines, an examination of the "circumstances of the offender's behavior," the impact on victims and "sufficient information for the court to order restitution."

The three were convicted Feb. 22, after a three-week trial. The convictions were returned one day shy of the second anniversary of the indictment.

In addition to laying out the scheme and the charges in the indictment, prosecutors asked that the Gows and Williams forfeit nearly $5.2 million.

The sum includes the grant money VR Labs spent without meeting its promised $9 million capital investment or creation of 208 well-paying jobs.

The forfeiture also includes $500,000 invested in the company by Robert Haynes, who testified that he was told that his $240,000-per-year job with VR Labs depended on making a $500,000 investment. He gave the Gows the money and lost all of it.

The indictment of Williams and the Gows formally identified Haynes and Lee County as victims.

If a judge orders forfeiture of any funds the Gows or Williams are found to control, victims must make a formal request the U.S. Department of Justice to receive compensation.

In May 2017, Lee County won a $4.7 million judgment against VR Labs in Circuit Court after suing to recover the grant money.

County Attorney Richard Wesch said work to collect the money continues.

“We will do everything we can as the Office of County Attorney to recover the public’s money from the Gows,” Wesch said

There has been no indication that VR Labs has any money. The county prevailed in the civil case when VR Labs did not hire a replacement attorney after its last law firm quit the case. The judge refused to let Kay Gow represent the corporation because only a lawyer can represent a corporation.

Under Florida law, a finding of "improper conduct" by a company is required before the corporate veil that normally shields a company's owners from liability can be pierced.

There has yet to be an accounting of the financial status of the Gows. Kay Gow was called to a deposition during the county's civil case, but invoked her Fifth Amendment right against self-incrimination.

The Gows have been ordered to remain residents of their Bonita Springs home pending sentencing but are facing eviction in pending foreclosure proceedings.

At the same time that former Lt. Gov. Jeff Kottkamp, a one-time VR Labs CEO, was testifying in the criminal case in the Fort Myers federal courthouse on Feb. 12, a clerk in the Lee County courthouse on the other side of Monroe Street was issuing a default against the Gows because they did not contest the foreclosure from their home for nonpayment of the mortgage.

Bonita Springs home of Robert and Kay Gow, convicted of fraud and other charges in federal court Friday. The Gows have received a foreclosure notice on the property, which they bought for $1.6 mlllion in 1998. Prosecutors say the $11,000 per month mortgage was paid with Lee County tax dollars through a money laundering scheme.(Photo: Lee County Property Appraiser photo)

The couple owes $2.1 million in principal, interest and costs on a mortgage on the home the Gows purchased in Quail West in Bonita Springs for $1.6 million in 1998, which was refinanced in 2005.

Testimony during the trial said the $11,000 monthly mortgage payments came from money Williams kicked back to the Gows after billing Lee County for double the cost of bottling equipment for the planned VR Labs plant.

The last mortgage payment was made in May 2018 on the property, now valued at $1.9 million.